Who’s Really in Charge at Alphabet Inc?

On the surface, it’s understandable — almost admirable. Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), parent to search engine giant Google, isn’t going to renew some artificial intelligence development work it’s been doing for the Pentagon. Why? It’s got the potential to be used as an offensive weapon.

Fair enough. Companies have a right to decline business for whatever reason they choose, or for no particular reason at all. That’s one of the benefits of doing business in America.

There is something about the business decision that should at least be a little unnerving to current and prospective owners of GOOGL stock, however.

That is, it was a (large) group Alphabet employees that pressured the organization into giving up the contract worth an estimated $250 million per year, and a project that could have led to many more — and bigger — government contracts.

It’s a development that raises a major question: Who’s really in charge of Alphabet Inc, and are shareholders even part of the equation anymore?

It’s Complicated

Don’t misread the message. It’s a complicated issue that deserves to remain complicated and nuanced rather than simplified with a mere “employees ought not to wield that kind of company control.”

The project in question is called Maven. In layman’s terms, Maven uses an artificial intelligence framework supplied by Google that would help military drones identify potential targets in a combat theater.

Aside from concerns that the technology could be used on existing Google users (though it’s not clear why the company would be okay with servicing the United States’ security threats), more than 3,000 Alphabet employees were concerned enough that the platform could be tweaked into a “first strike” technology that they petitioned to cancel the contract, and the work, altogether.

Fair enough. Alphabet Inc was started as a way to connect people to the web, and advertisers, in more effective ways. It’s grown up well beyond that now, offering smartphones, developing self-driving vehicles and even venturing into healthcare technologies.

Military hardware and software, however, was never part of the equation.

Besides, companies like Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) are also both waist-deep into AI, and both are also jockeying for lucrative government contracts. Let one of them take this controversial ball and run with it.

And it’s that last little detail that leaves some GOOGL shareholders wondering who’s really in charge and how many more opportunities might such a mindset squelch.

Again, it’s complicated. In its most basic form, though, Alphabet is a for-profit business owned by shareholders, who are seeking a reasonable, risk-adjusted return on their money, with the understanding that sometimes short-term weakness leads to a much bigger long-term reward.

It’s not entirely clear all Alphabet’s employees are onboard with that idea.

It is, if we’re all being brutally honest with ourselves, a sign of the times. Gone are the days where an employee did what their employer told them to do. If they found the task morally distasteful, they would simply quit and find another job (as some Google employees involved in the project have).

In the modern workplace, the lines between personal opinions and professional performance are blurred, and workers, for better worse, are willing to make their work a reflection of who they are.

And it is a double-edged sword.

Though an employer may reject the idea that a worker, or workers, dictate the work that will or won’t be done, perhaps it’s the only remaining option worker-citizens feel they have to change the world for the better — something too many higher-ups don’t seem interested in doing.

One also has to at least respect the ownership of a company these worker-activists are taking, even if it can sometimes get a little misguided.

On the other hand, shareholders are at the losing end of the spectrum. The more business that gets turned away, the further down that spectrum shareholders slide.

The Last Word on Alphabet Inc

It’s not the end of the world; nor is it exactly anything new. Unions were more or less formed to prevent oppressive company ownership from wielding too much power, and if there’s a cause that prompts a group of people to draw a line in the sand, weapons are a reasonable (no pun intended here) battleground to start a meaningful dialogue. Alphabet’s going to be fine, with or without the Maven project.

Make no mistake, though. Another company will pick up where Google left off.

In a more philosophical sense, though, mark this seemingly modest acquiescence as the beginning of a new chapter in a politically charged world.

Neither management nor shareholders hold as much influence as they used to. Workers are at least a bit more empowered. It remains to be seen how else they’ll use it, within Alphabet Inc as well as within other companies, now that a few thousand Google employees have shaken things up.

Profits might not be the market’s overarching priority much longer.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.


Article printed from InvestorPlace Media, https://investorplace.com/2018/06/whos-really-in-charge-at-alphabet-inc/.

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